The price of silence: indemnity on a party/party basis

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The NSW Supreme Court has found that an insured’s failure to seek the insurer’s prior written consent to incur costs in connection with legal proceedings did not preclude the insured from being indemnified for those costs under the policy. However, the insured’s failure to comply with the terms of the policy influenced the court’s decision to award costs on a party/party, rather than indemnity, basis.

Pandurevic v Southern Cross Constructions (NSW) Pty Ltd (No 3) [2012] NSWSC 1601 indicates that the insurer’s failure to draw the insured’s attention to certain critical policy terms during the claims process may make it difficult for the insurer to rely on those terms in later proceedings to justify a denial of indemnity…

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